Intel records revenue and profit gains in Q4

Intel also expects a strong fiscal 2011 performance

Intel on Thursday said it wrapped up a strong fiscal 2010 with profit and revenue gains in the fourth quarter, and predicted a strong fiscal year 2011.

The company reported net income of $3.4 billion for the quarter ended on Dec. 25, up by 48 percent compared to the same quarter last year. Earnings per share were $0.59, beating the consensus estimate of $0.53 from analysts polled by Thomson Reuters.

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Intel reported revenue of $11.5 billion, an increase of 8 percent compared to the same quarter last year. Analysts had expected revenue to be $11.37 billion.

Intel's Data Center Group recorded $2.5 billion in revenue for the quarter, compared to $2 billion in revenue during last year's fourth quarter. The Data Center Group offers products for servers, storage, and workstations.

"The enterprise market segment was strong, specifically the server segment, as a result of strength in both the corporate and data center segments," said Stacy Smith, Intel's chief financial officer, in a commentary published on Intel's website (PDF).

Revenue for the PC Client Group was $8.03 billion, growing from $7.76 billion in last year's fourth quarter.

For the whole year, Intel reported revenue of $43 billion, up 24 percent compared to the last fiscal year. Intel is hoping for a strong fiscal 2011.

"2010 was the best year in Intel's history. We believe that 2011 will be even better," said Paul Otellini, Intel's CEO, in a statement.

For the first quarter of 2011, Intel is expecting revenue to be around $11.5 billion, plus or minus $400 million.

The past two weeks have been busy for Intel. The company last week announced the launch of its next generation of Core processors based on the Sandy Bridge architecture, which include a CPU and graphics processor on a single chip.

Sandy Bridge processors will account for more than 30 percent of the company's revenue in fiscal 2011, Otellini said during an earnings call.

Intel and Nvidia also ended a long legal battle by signing a cross-licensing agreement, under which Intel has agreed to pay Nvidia $1.5 billion. Intel will pay $300 million to Nvidia next week and then make annual payments through January 2016.

While Intel remains dominant in the PC space, it is now trying to make its way into the smartphone and tablet space, which is dominated by ARM. Tablets based on Intel's Oak Trail chips are expected to start shipping by the end of this quarter.

Intel has also said that it will make smartphone-related announcements at the Mobile World Congress, which will be held next month in Barcelona. The company is developing a low-power chip for smartphones code-named Medfield, which is based on the Atom core.

Smartphones with Atom chips will be released later this year, Otellini said.

Intel has almost no presence today in smartphones, which are ruled by ARM-based designs. To compete, Intel will use its advanced manufacturing technologies to reduce power consumption and improve the performance of its chips, Otellini said.

Intel currently makes its most advanced chips using the 32-nanometer process, and will switch to the 22-nm process technology by the end of this year.

ARM got a boost last week when Microsoft announced its next Windows OS will run on the ARM architecture, although Otellini said that what looks like a potential setback for Intel could actually benefit the company. Windows' availability on ARM will help Windows be more closely associated with mobile devices, which in turn could have knock-on benefits for Intel, he suggested.

Windows support could provide an opportunity for ARM to creep up into the PC market, although PCs have different power and performance requirements, Otellini noted. ARM CEO Warren East said last week his company is not targeting PCs because the shipping volumes are relatively small and ARM would rather focus on tablets and smartphones.

Tablets with Intel chips running Windows 7 will start shipping by the end of this quarter. Intel is also developing its own mobile OS for tablets called Meego, which will be seen in tablets later this year, Otellini said.

Intel will also try to renew excitement in the netbook segment by adding new features to its Atom chips and trying to lower prices of netbooks in emerging markets, Otellini said.

Atom is also having success in embedded devices, according to Otellini. "Many of the wins in this space are architecture conversions from Arm and MIPS" chips, Otellini said.

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